Sinn Fein's leader-in-waiting had described a three month suspension with pay from party activity as "appropriate and proportionate" punishment for him posting a crass video online.

However, the sanction failed to quell public outrage and the West Tyrone representative yesterday accepted that remaining an MP would "impede any reconciliation process".

Mr McElduff's resignation came hours after the only survivor of the Kingsmill attack, Alan Black, gave an emotional radio interview describing the cold-blooded murders of his work colleagues. He accused the MP of "dancing on their graves".

In a lengthy statement, Mr McElduff insisted he was not making any reference to the murder of 10 Protestants when he recorded a video of himself with a loaf of Kingsmill bread on his head.

And in a significant development he described the killings as "wrong, unjustifiable and sectarian".

Ms McDonald, who is expected to take over as party president on February 10, has yet to comment on the resignation.

"But it is reflective of how Sinn Fein has dealt with its past and the atrocities that were committed by the IRA - not just the Kingsmill massacre, you can take the La Mon bombing, Enniskillen, you can take a range of horrific cases where innocent people were butchered and maimed.

"Yet Sinn Fein has tried to portray all of that as some part of some glorious war and some war that was justified," Mr Martin said.

Labour Party leader Brendan Howlin said it was "disappointing that Sinn Fein and their leader in waiting Mary Lou McDonald did not recognise the huge hurt that was caused by this insensitive action despite their constant mantra of respect, integrity and equality".

He said anybody who heard Mr Black recount the events of January 5, 1976 in recent days "would recognise the enormous work still to be done to foster reconciliation on our island".

"The Kingsmill massacre was one of the most stomach churning events of the Troubles. It was an act of ethnic cleansing where individual workers were singled out and shot because of their religious beliefs," Mr Howlin said.

Tanaiste Simon Coveney said it was clear that Sinn Fein's proposed suspension of Mr McElduff was not proportionate to what had happened.

"I think his resignation is the right decision," he said.

"I think the hurt that has been caused by the posting of that video meant that this was going to be a very divisive issue between two communities in Northern Ireland and, most importantly, I think there is a recognition in this resignation of the hurt that was caused to families in particular."